Friday, December 30, 2005

Raser Technologies--Press the DELETE key.

Raser Technologies, Inc. (RSTG.OB - $9.40), a company that develops and licenses advanced electric motor, electric motor drive and related technologies, first came to the 10Q Detective's attention through one of those unsolicited press releases dropped in our e-mail box. Due diligence has unearthed that Raser is a stock-promoter's dream--hyped PR with no content.

According to corporate literature, Raser offers an innovative, proprietary platform of electromagnetic technology for both electricity-to-motion and motion-to-electricity applications. Purportedly, the Company has developed several innovations in electric motors and controllers that increase torque, power and efficiency. Raser calls its technology developments "Symetron" and label motors enhanced by the technology as "Symetron" enhanced motors.

Management believes that its technology will have an impact in several transportation, industrial and power generation markets. Targeted transportation markets include rapidly emerging hybrid-electric vehicles, public transportation vehicles on wheels and rails, and recreational vehicle markets. Early targets for industrial market applications include heating, ventilation and air conditioning, fluid pumps and fan motors.

Formed in 2001, Raser has a market capitalization of approximately $465 million, yet year-to-date, has delivered less than $200,000 in sales!
Management, has had a busy 2005--raising money! This past April 2005, the Company netted proceeds of approximately $18.4 million by selling 20,000 shares of preferred stock designated as Series C Convertible Preferred Stock to a group of investors.


Management states in 10Q filings that they "are heavily involved in research and development." Yet, in the first six-months of this year, cash flows from investment activities indicate a $20.7 million spend on investable securities and a whopping $304,438 expense for patents, trademarks, and new equipment. Research and development expenses were $415,718 in the second quarter of 2005. This increase of $221,992 from the prior year primarily reflects increased staffing and salary expenses!


The Company has been occupied with stock-based compensation. During the six months ended June 30, 2005, Raser granted options to purchase an aggregate of 282,000 shares to employees, directors and service providers. Not that management seems to care, but...the total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects was approximately $1.9 million!


In 2004, the Total Cash Contribution (TCC) paid out to Kraig T. Higginson, CEO, was $180,000. William Dwyer, VP & CFO, made TCC and long-term incentives [ read stock options] totaling $993,403.
Management expects to derive the large majority of future revenue from sales of technology licenses and collection of licensing royalties.

According to the Company, licenses of the technology to potential customers will typically result from the entry of the potential customer into Raser's "Test Demonstration Program." This Test Demonstration Program involves four phases, inclusive of, computer modeling capabilities; specific demonstration of the Symetron advanced motor technology into a motor of the customer's choosing; specific installation of the technology into the customer's product; and, a license agreement, whereby the customer will acquire specified rights to manufacture or use the Symetron advanced motor technology.


Management alleges that "many customers have joined the program, most of which are in early stages of Phase 1 or Phase 2 development." In other words, the Company still has nothing material in the way of contracts to show its shareholders.


Lest the 10Q Detective be accused of deriding the Company of not doing much: management did travel to Monaco to participate in an Electric Vehicle Symposium.
The Bottom-line--Raser Technologies, Inc. is touting this breakthrough motor technology that will increase both the performance and efficiency of engines/motors, yet the Company has no tangible sales--and spends more money on perks than on R&D. If you get an unsolicited e-mail that aggressively promotes Raser as the 'next-best' thing...press the DELETE key!

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Anonymous said...

Raser's technologists lack familiarity with drives. Raser's technology is actually relatively inefficient and expensive compared to other means of driving similar motors. For comparison purposes, one can almost always find a motor that is larger and less efficient.

With a burn rate of around 500K per year per employee, it's pretty clear what Raser is doing with investors' money.